Office leasing in Los Angeles, which withered during a pandemic shift to remote work, is on the rise — but so are the number of available workplaces.
Office landlords across the city inked deals for 3.8 million square feet during the third quarter ending last month, the highest since the dawn of the pandemic four years ago, the Commercial Observer reported, citing an analysis by Savills.
That’s a 27 percent boost in leasing activity year-over-year, and nearly hits the 4 million square feet of newly leased offices in the first quarter of 2020.
At the same time, the rate of office availability in L.A. is still on the rise.
Availability jumped 0.9 percent to 28.3 percent from the previous period, and 1.8 percent year-over-year.
Average monthly asking rents for offices remained flat at $3.90 per square foot, though asking rents for Class A offices rose 1.7 percent year-over-year with a “flight to quality” in Century City and across Southern California.
The rise in leasing activity ignited cautious optimism that demand for offices is returning to L.A., even as office-using employment growth in the region, particularly in the tech and entertainment industries, has fallen over the past year, according to Savills.
“Leasing activity will be very closely watched to see if the Los Angeles office market has turned the corner or if recovery is further away,” the report said.
Notable office deals over the summer included a lease by Southern California Gas Company last month of 198,600 square feet at 350 South Grand Avenue, in which the company will leave its namesake Gas Company Tower at 555 West 5th Street.
Terms of the long-term lease with Mid-Wilshire-based CIM Group, owner of the building, were not disclosed.
JPMorgan Chase also signed a 162,700-square-foot renewal and expansion lease at 2029 Century Park East in Century City, the top office submarket in Southern California, according to the Savills report.
Terms of the deal between the New York-based bank and the landlord, Houston-based Hines, were not disclosed.
— Dana Bartholomew
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